Downturn: crisis or opportunity?

Submitted by Matthew on 26 September, 2012 - 11:13

It’s not often that words of the boss of a £25 billion fund management outfit invoke obvious parallels with the perspectives documents of a certain orthodox Trotskyist outfit once notorious for its regular predictions that calamity-inducing economic crisis is just round the corner.

But Hermes chief executive Saker Nusseibeh, the man who handles the money owned by the BT pension fund and numerous other investors, is deeply concerned about the prospects for the system he favours.

“It looks like the era of great economic growth that was started in the Reagan/Thatcher period is over and that anaemic growth is going to go on for some time. The wealth pie will be getting smaller and that raises questions about the division between capital and labour,” he recently told the Financial Times.

As a result, he foresees lots of bad stuff not too far down the line, including a new Cold War between China and the US, a resurgence of economic nationalism in Europe reminiscent of the run-up to world war one, high food prices, chronic unemployment and social unrest that could topple over into civil wars across the continent.

Blimey. All that was lacking was a call to build the Workers Revolutionary Party as the British Section of the International Committee of the Fourth International, and you could have taken his outburst straight from an editorial in the News Line, circa 1981.

But Mr Nusseibeh wasn’t particularly concerned about the impact all of this might have on real flesh and blood human beings. No mention of any of that.

Instead, we were cautioned that these developments would represent negative news for equities, bonds and commodities alike. In the world that leading fund managers inhabit, that must just about define the meaning of the phrase “worst case scenario”.

I guess it was the sheer gravity of his outlook — which can be found in a story titled “Politics a big risk, warns Hermes”, printed on September 16 and still available online, if you are interested — that took me slightly aback.

Like all Marxists, I am hopeful that economic downturn could act as a catalyst for a revitalised labour movement, placing socialist transformation back on the agenda in the advanced capitalist countries. But revolution is one thing, famine and civil war another.

Not only that, but I was also struck by the publication in which the remarks were published. Articles in the FT’s discussion pages since the collapse of Lehman Brothers four years ago have usually been characterised by a distinct sobriety.

The pink broadsheet of course recognises that “capitalism is in crisis”, and famously gave that strap line to a series of opinion pieces earlier this year.

Only the more gloomy investment banking heavyweights, academics and finance ministers have argued that we are in for a period of extended stagnation, comparable to that which beset the Japanese economy in the 1990s.

The more optimistic among them reckon that things may well perk up in a year or two, provided that either Keynesian or free market economic prescriptions — delete as appropriate — are rigorously applied.

But so far only Nusseibeh has come anywhere near to adumbrating anything like the coming collapse of capitalism. Normally that is a job for the more alarmist constituents of the Trot left, some of which have cried wolf so often that their tendency to do come rain or come shine has been awarded the nickname of “catastrophism” by more reality-based comrades.

To some extent, the catastrophists can even claim scriptural authority. Back in 1938, Trotsky himself wrote in stark terms about the “death agony of capitalism”, and however valid that projection might have looked to contemporaries, some 74 years later capitalism is very much still with us.

Rhetoric of this nature, in Britain at least, has been substantially toned down in recent decades. As capitalism underwent one of the most sustained spurts of expansion it has known since its inception as a mode of production, the idea that the show was coming off the road in short order proved rather harder to sustain.

Even so, many Marxist economists have maintained the more subtle subtext that despite all apparent evidence to the contrary, capitalism has been in permanent structural decline since the 1970s, buttressing the contention with figures purporting to show a continuing fall in the rate of profit.

Given the incorporation of the former bureaucratic collectivist economies into the global economy and the industrialisation of much of the former third world, such analysis long seemed to me to fly in the face of available evidence.

Even now, I see no good arguments for definitively excluding the possibility that capitalism will experience a renewed round of accumulation, especially if the depoliticisation of first world labour movements allows the ruling class to force through a dramatic reduction in the standards of living of the first world working class.

On the other hand, the opportunities for repoliticisation seem to me to be at the highest they have been in my entire adult life. Maybe Mr Nusseibeh and the residual clique of Healyites that have peddled the WRP stance for decades really are on to something after all.